COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. No.:         5351-01

Bill No.:          HB 2328

Subject:           Energy; Mining and Oil and Gas Production; Revenue Dept.; Taxation and Revenue - Sales and Use

Type:              Original

Date:               March 11, 2008

Bill Summary:            Would exempt certain utilities, and machinery and equipment used by certain businesses in mines, from sales tax.

FISCAL SUMMARY

Numbers within parentheses: ( ) indicate costs or losses.

This fiscal note contains 6 pages.

☐ Estimated Total Net Effect on All funds expected to exceed $100,000 savings or (cost).

☐ Estimated Net Effect on General Revenue Fund expected to exceed $100,000 (cost).

FISCAL ANALYSIS

ASSUMPTION

Officials from the Department of Revenue assume this proposal would have no fiscal impact on their organization.

Officials from the Office of Administration, Division of Budget and Planning (BAP) assume this proposal would not result in additional costs to their organization. BAP officials also stated that the proposal would create a sales tax exemption for utilities for certain businesses operating in mines. The proposal would reduce general and total state revenues, and local government revenues by an unknown amount.

Officials from the Department of Natural Resources (DNR) assume this proposal would create a sales and use tax exemption for all utilities purchased by a business operated in a mine. The Parks and Soils Tax is a one-tenth of one percent sales and use tax; therefore, any additional sales and use tax exemption cause an unknown loss to the Parks and Soils Fund. DNR assumes the Department of Revenue would be better able to estimate the amount of impact.

Oversight has researched the available information on businesses located in former underground mines and found several major business parks which would appear to qualify for this exemption. Oversight was not able to determine the amount of qualifying expenditures by these businesses and will assume for the purposes of this fiscal note that the amount of sales tax revenue would be unknown for state funds which receives sales taxes, as well as local governments.

This proposal would reduce total state revenue.

FISCAL IMPACT - Small Business

This proposal could have a fiscal impact on small businesses which operate businesses located in mines.

FISCAL DESCRIPTION

This proposal would exempt from sales tax all electrical energy, all gas whether natural, artificial, or propane, all water, all telecommunications services, and all other utilities, and all machinery and equipment used or consumed by a person operating a business in a mine that is not used for mining if such mine contains at least one million square feet of space that may be used for such business.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Office of Administration

            Division of Budget and Planning

Department of Natural Resources

Department of Revenue

                                                                                                Mickey Wilson, CPA

                                                                                                Director

                                                                                                March 11, 2008